Download 5 Reasons to Switch from a Simple IRA to a 401(k) Today

5 Reasons To Switch From A Simple IRA to a 401(k) Today

Parker Elmore, ASA, MAAA, EA, FCA | Sarah F. Rothenberg

Simple IRAs are a great tool for small businesses to provide retirement benefits for themselves and their employees, with few complexities. However by opting for a simplified retirement plan, employers forgo flexibility and may end up leaving money on the table. There is often the misconception that a 401(k) plan is unaffordable for a small business. However, businesses will often find that a small increase in administrative fees is more than offset by the benefits, and consequential savings, that a 401(k) can provide.

Benefits of Switching to a 401(k)

Recruit and Maintain Talenta. Remain competitive with large employers
b. Vary benefits to reward valued employees including yourself
Vesting period may increase employee retention
May offer additional benefits after a specified vesting period

Maximize Tax Savings a. New 401(k) plans may be eligible for a federal tax credit up to $500 per year for the first three years
b. Employer contributions (up to $54,000 per employee as of 2017) are tax deductible

401(k) plans may not be the right choice for every employer. So consider your goals and consult a professional. However, if you are looking to maximize your tax savings and save more for retirement, then a 401(k) may be for you.